Analyzing Hexcel (NYSE:HXL) & AAR (NYSE:AIR)

Hexcel (NYSE:HXL) and AAR (NYSE:AIR) are both mid-cap aerospace companies, but which is the better investment? We will compare the two companies based on the strength of their dividends, risk, institutional ownership, analyst recommendations, earnings, valuation and profitability.

Insider and Institutional Ownership

95.5% of Hexcel shares are owned by institutional investors. Comparatively, 90.7% of AAR shares are owned by institutional investors. 1.8% of Hexcel shares are owned by insiders. Comparatively, 3.6% of AAR shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Earnings & Valuation

This table compares Hexcel and AAR”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Hexcel	$1.89 billion	3.98	$109.40 million	$1.52	65.81
AAR	$2.78 billion	1.89	$12.50 million	$4.51	29.37

Hexcel has higher earnings, but lower revenue than AAR. AAR is trading at a lower price-to-earnings ratio than Hexcel, indicating that it is currently the more affordable of the two stocks.

Risk & Volatility

Hexcel has a beta of 1.08, meaning that its stock price is 8% more volatile than the S&P 500. Comparatively, AAR has a beta of 1.13, meaning that its stock price is 13% more volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of current ratings and recommmendations for Hexcel and AAR, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Hexcel	1	10	3	1	2.27
AAR	0	2	4	1	2.86

Hexcel currently has a consensus price target of $91.00, suggesting a potential downside of 9.03%. AAR has a consensus price target of $131.20, suggesting a potential downside of 0.95%. Given AAR’s stronger consensus rating and higher possible upside, analysts plainly believe AAR is more favorable than Hexcel.

Profitability

This table compares Hexcel and AAR’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Hexcel	6.07%	11.08%	5.66%
AAR	5.46%	12.39%	5.68%

Summary

AAR beats Hexcel on 9 of the 14 factors compared between the two stocks.

About Hexcel

Hexcel Corporation develops, manufactures, and markets carbon fibers, structural reinforcements, honeycomb structures, resins, and composite materials and parts for use in commercial aerospace, space and defense, and industrial applications. It operates through two segments, Composite Materials and Engineered Products. The Composite Materials segment manufactures and markets fabrics, multi-axials, specialty reinforcements, prepregs and other fiber-reinforced matrix materials, structural adhesives, molding compounds, tooling materials, polyurethane systems, and laminates that are used in military and commercial aircraft, wind turbine blades, recreational products, and other industrial applications, as well as in automotive, marine, and rail transportation. The Engineered Products segment manufactures and markets aircraft structures and finished aircraft components, including wing to body fairings, wing panels, flight deck panels, door liners, rotorcraft blades, spars, and tip caps; and aircraft structural sub-components and semi-finished components used in rotorcraft blades, engine nacelles, and aircraft surfaces, such as flaps, wings, elevators, and fairings; and RF interference control products for military and aerospace applications. This segment also provides interference control materials, structural composites, and services; dielectric absorber foams; magnetic absorbers; and thermoplastics for commercial and defense applications. The company sells its products directly through its managers, product managers, and sales personnel, as well as through independent distributors in the Americas, Europe, the Asia Pacific, India, and Africa. Hexcel Corporation was founded in 1946 and is headquartered in Stamford, Connecticut.

About AAR

AAR Corp. provides products and services to commercial aviation, government, and defense markets worldwide. The Parts Supply segment leases and sells aircraft components and replacement parts. The Repair & Engineering segment provides airframe maintenance services, such as airframe inspection, painting, line maintenance, airframe modification, structural repair, avionics service and installation, exterior and interior refurbishment, and engineering and support services; component repair services comprising maintenance, repair, and overhaul (MRO) services, engine and airframe accessories, and interior refurbishment; and landing gear overhaul services, including repair services on wheels and brakes. This segment also develops specific aircraft components and parts; and designs proprietary designated engineering representative repairs. The Integrated Solutions segment engages in the fleet management and operation of customer-owned aircraft; provision of supply chain logistics services, such as material planning, sourcing, logistics, information and program management, and parts and component repair and overhaul services; and flight hour component inventory and repair services. In addition, the segment provides integrated software solutions comprising Trax, a cloud-based electronic enterprise resource platform, as well as a suite of paperless mobility apps for automating MRO workflows. The Expeditionary Services segment designs, manufactures, and repairs transportation pallets; and containers and shelters for military and humanitarian tactical deployment activities, including armories, supply and parts storage, refrigeration systems, tactical operation centers, briefing rooms, laundry and kitchen facilities, water treatment, and sleeping quarters, as well as engages in provision of engineering, design, and system integration services for specialized command and control systems. AAR Corp. was founded in 1951 and is headquartered in Wood Dale, Illinois.